http://dx.doi.org/10.4322/pmd.2013.004 Open innovation practices in the development of wind energy supply chain: an exploratory analysis of the literature
Mario Orestes Aguirre González, Marcela Squires Galvão, Samira Yusef Araújo de Falani, Joeberson dos Santos Gonçalves, Lorena Tâmara Sena da Silva Federal University of Rio Grande do Norte
e-mails: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]
Abstract: The open innovation approach and its practice in technological innovation projects have been revealed in the literature and observed in practice companies as an old phenomenon. What differentiates its current use is that today its practice occurs in a systematic and formalized form in companies. This paper carried out a bibliographic‑exploratory research about the wind power supply chain and it analyzes how technological innovations made their development possible. The study focuses specifically on exploring within the technological innovations occurred in the chain wind power, as the innovative approach followed by developers organizations. Results indicate that open innovation practices were essential for the success of economic and technological feasibility for the development of such chain, primarily by what happened partnership between the manufacturers of major components (aero generators, towers, blades) wind energy, research institutes, laboratories, universities and federal governments through incentive policies.
Keywords: technological development, wind energy supply chain, open innovation. 1. Introduction The current economic environment requires a market the search for new renewable energy sources, among them response in less time and with greater product innovation. wind and solar energy (DUTRA, 2001). In organizations, the Research and Development department Wind energy presents itself as an excellent alternative has the responsibility for carrying out the research on in generating clean energy. In Brazil, the increase in the new production alternatives of products and services generation of wind energy increased from 145 MW in 2007 at affordable costs, providing competitive advantage to to 2.3 GW in 2012 (AGÊNCIA..., 2012). The Northeast companies. The generation of residues and the emission region in Brazil stands out as a potential region of climate of pollutants that damage the environment grow in direct and weather conditions with winds of high quality, measured proportion to consumption. Thus, the search for sustainable by indicators speed and continuity. However, the expansion and ecologically correct products is generating new of wind energy too occurred due to the economic and market opportunities, since environmental issues present technological feasibility of the main components of a wind themselves as strategic targets in the corporate environment. farm as a result of the development of more efficient and The partnership among an organization and other economical technologies. According to data of the Agência companies or research institutes seeking to exchange market Nacional de Energia Elétrica – ANEEL (AGÊNCIA..., information and technology to innovative ideas that arise 2012), the price of electricity sold, from wind farms, fell or solutions to existing ideas, characterize the practice of from R$ 305/MWh in 2005 to R$ 100.9/MWh in 2011. open innovation. According to Chesbrough (2003, 2011), This paper aims to analyze the application of open the open innovation occurs when the company adds external innovation approach in technological innovation projects of knowledge and, along with internal knowledge, it generates equipment and components supply chain of wind energy. value for the organization. That is, the boundary between For this, was conducted a bibliographic-exploratory study the firm and its environment is porous assuming exchange on the topics: open innovation, technological innovation and of expertise. chain of wind energy. Further, the study was complemented One of the sectors that have shown a significant amount with technical reports and research on the development of of research in the area of sustainability is the energy sector, technologies of wind energy supply chain. whose consumption increases, progressively, both in The paper is organized into five topics. The first one industry and commerce, and also in residences. This concern describes the introduction and the purpose of the research. consumption along with sustainable development justifies Topics 2, 3 and 4 present a brief bibliographic review on
104 Open innovation practices in the development of wind energy supply chain: an exploratory analysis of the literature González et al. the basis of the topic under study: open innovation, wind The difference between these two approaches is in energy and technological innovation in the of wind energy the way enterprises organize their innovation processes. chain, respectively. Finally, the fifth section deals the final According to Chesbrough (2003), the process of research considerations of the study. and development, which is exclusively internal of companies, discriminates the good ideas, which are not 2. Open innovation presented as good, so that only the best are sold. Though, the The traditional model of innovation – closed innovation open innovation still has the ability to retrieve projects that (see Figure 1) – requires control in innovations, in other seem poor, but may become useful during its development. words, companies must generate their own ideas without Organizational leaders must understand the practice of sharing their clients and partners with the external this approach in order to be adopted in accordance with environment. The benefits and profits from innovation the company’s business model, because every change has are reinvested in the company to new research. However, an impact on the organization, as sharing common vision the mentality has changed and businesses were opening and mission with partners; changing systems, processes, their research to other companies, organizations and their values, culture of the company as an entire; emergence of customers. Therefore, when adding external knowledge with opportunities and threats. Leaders need to provide even more internal knowledge, it increases the value of the organization, motivation, confidence to performance in the team so that so they started to practice the new innovation model – open everyone is looking for the same common aim. innovation (see Figure 2) (CHESBROUGH, 2003). The open innovation approach shows up differently for small and large businesses. According to Lindegaard (2011a) the main features that link these differences are: • Speed in decision-making – in small businesses, due to lack of bureaucracy, decisions are made more quickly. Though, the practice of open innovation in small businesses progresses more slowly than in large firms. The latter suffer pressure from the first ome in order to act faster than they are; • Attitude to risk – when a small business is still starting on the market, the whole business is a risk. But, just as in speed, when talking about open innovation, both types of company may, due to their differences, do not relate well; and • Resource Allocation – in small businesses, every feature is relevant to the company, while in large organizations, this narrow view of importance of Figure 1. Model of closed innovation. Source: Chesbrough resources is more malleable. (2003). These differences must be understood by both parties of the the partnership formed for the open innovation practice to be satisfactory. Lindegaard (2011b) presents a research by the Danish Chamber of Commerce which shows that between the years 2007-2010 only 44% of Danish companies had conducted some innovation activity in their product, service or process. The research also reports the fact that large companies launch new products more often than small firms. For the success of chain of any organization, it becomes necessary to seek information from two types (PILLER; IHL, 2009): detailed and accurate knowledge about the needs related to the product – client domain – and the techniques of how to solve these needs – the company domain. Additionally, businesses can contribute to skills, both their employees as their customers, to identify and Figure 2. Model of open innovation. Source: Chesbrough educate its consumers – a view from the outside – and (2003). organize themselves internally - view from the inside.
Vol. 10 nº 2 December 2012 Product: Management & Development 105 According to Huizingh (2011), the concept of open demand and political priority for renewable energy has innovation can be understood through the distinction among transformed India into one of the most dynamic markets the terms content, context and process. The content covers in the world. At the same time, the introduction of a new the different types of openness of the organization, the tax code and uncertainty about the future tax benefits that main activities of inbound and outbound for innovation have driven much of the growth in India to date are of and the factors of its effectiveness. The context involves concern to investors (GLOBAL..., 2011). Still, the country characteristics of the internal and external environment of has the company Suzlon, considered as one of the leading the company. Finally, the process involves the transition manufacturers of wind turbines in the world. to open innovation (before it was a closed innovation, that is, knowledge and practices belonged exclusively to the 3.2. Wind power in Europe company) and practices of innovation. Europe installed 10.3 GW in 2011, of which 9.6 GW was installed in the EU-27 (GLOBAL..., 2011). These figures are 3. Wind power almost identical to the numbers of 2010, the market, which Wind energy is currently seen as one of the most is a symbol of stability in the European market provided promising renewable energy sources in the world. It has by long-term policy framework for renewable energy. recorded in recent years a truly remarkable evolution. In terms of annual installations, Germany was by far the Figure 3 shows the exponential behavior of installed wind largest market in 2011, with an installation of 2.09 GW of capacity, with the highest concentration currently installed new capacity. The United Kingdom ranked second with capacity in China, USA and Germany (see Figure 4). In 1.3 GW, including 752 MW of offshore capacity, followed 2010, China became the country with the largest installed by Spain (1.05 GW), Italy (950 MW), France (830 MW), capacity in the world, reaching in 2011 its holding of 26.2% Sweden (763 MW) and Romania (520 MW). Turkey and of total installed capacity, followed by the United States that Poland have also had good years with the installation of participates with 19.7% of total installed (GLOBAL..., 2011). 470 MW and 436 MW, respectively. 3.1. Wind power in Asia 3.3. Wind power in North America China has abundant exploitable wind resources, both The market of wind power in the USA grew in more onshore and offshore, due to its large land area and long than 30% in 2011, totaling 6.8 GW in 31 states for a total coast. The commercial potential on earth is between 1,000 installed capacity of almost 47 GW, and cumulative market and 4,000 GW and its potential in offshore waters of 5-50 m growth of nearly 17%. Canada had a record year in 2011, depth is 500 GW. China installed approximately 18 GW for the installation of 1.26 GW, and passing the value of 1 GW the second consecutive year and therefore considering the for the first time in a single year, aiming to add 1.5 GW possibility of the market is entering a consolidation phase to capacity in 2012. Canada has a total installed capacity of resolve some of the problems created by its high economic 5.3 GW now, and it is on track to meet the target industry growth. In 2011, China remains the market leading global set of 10 GW by 2015 (GLOBAL..., 2011). cumulative installed wind capacity with a total of 62.36 GW 3.4. Wind power in Brazil by the end of year 2011. The Chinese turbine manufacturers appear on the list of GWEC (GLOBAL..., 2011) of the top In this scenario, Brazil stands out as the most promising 10 manufacturers in the world, with Sinovel, Goldwind, market for progress in Latin America, due to the fact that Mingyang United Power, among others. it has many areas with high wind potential, increasing The Indian market has surpassed the mark of 2 GW demand for electricity, industry and a solid reliable system in 2010 and 3 GW in 2011. The continued increase in of electricity distribution. Brazil has estimated a potential
Figure 3. Cumulative global wind capacity installed from 1996 to 2011 (GLOBAL..., 2011).
106 Open innovation practices in the development of wind energy supply chain: an exploratory analysis of the literature González et al. capacity of 143 GW of wind power, with most being spread 3.4.1 Wind power in the Northeast of Brazil along the northeast coast. In 2011, the Brazilian wind industry installed 583 MW, The great wind potential in Brazil is due to wind patterns bringing the total installed capacity to 1.5 GW, as shown that are among the best in the world, because in addition in Figure 5, representing a 63% increase in capacity and to having high speed, they are considered as well-behaved, an increase of 56% in terms of annual market growth in other words, without major fluctuations (COSTA; (AGÊNCIA..., 2012; BENNETT, 2010; GLOBAL..., 2010). CASOTTI; AZEVEDO, 2009). In the case of wind energy In October 2012, Brazil reached a value of 2.4 GW and has in the Northeast it may be noted that three states correspond over 7 GW by 2016, from the 147 projects currently under largely to the wind generation potential and the winds: Rio construction and another 507 granted. Grande do Norte, Ceara and Bahia. Table 1 presents the potential of winds in each region of the country, where the northeast appears in a privileged position, occupying more than 50% of potential wind generation. The graph in Figure 6 shows a comparative of the generation of wind energy to the northeast of Brazil, which
Table 1. Potential wind power generation by region. Region GW % Northeast 75 52,30 Southeast 29 20,71 South 22,8 15,90 North 12,8 8,93 Midwest 3,1 2,16 Total 143,4 100 Figure 4. Top 10 in accumulated capacity until December Source: Adapted from Aneel (AGÊNCIA..., 2012), EPE (EMPRESA..., 2011 (GLOBAL..., 2011). 2011).
Figure 5. Total installed capacity in Brazil (GLOBAL..., 2011).
Figure 6. Comparison of wind generation in the years 2011 and 2012 in the Northeast of Brazil. Adapted from Aneel (AGÊNCIA..., 2012).
Vol. 10 nº 2 December 2012 Product: Management & Development 107 comprises a comparison between the years 2011 and 2012 are in full operation. The projects total approximately $ 6 for the months January to September. We can see the billion in investments and are expected to generate between preponderance of wind power generation in the current year, 400 and 600 jobs during operation. 2012, compared to the previous year, with a greater growth A summary of the wind power projects to the states of of values of generation in the first seven months of the year. Ceara, Rio Grande do Norte and Bahia is shown in Table 2. In 2009, the state of Rio Grande do Norte ranked first in terms of enterprises engaged in wind energy auctions. The 3.5. Cost of wind energy first auction dedicated exclusively to the marketing wind The implantation of wind farms is not an alternative well power resulted in a total of 1.8 GW hired a median sales liked by some governments, because their initial investment price of R$ 148.39/MWh. With the auction, 71 sold their is still high – structure generation, generation efficiency, power plants in 20-year contracts, they are distributed in five availability and serviceability factor (BRONZONATTI; states: 18 in Bahia, 21 in Ceara, 23 in Rio Grande do Norte, IAROZINSKI NETO, 2008), indicating that even in an 8 in Rio Grande do Sul and 1 in Sergipe. In this auction, embryonic stage. However, the advantages that come with Rio Grande do Norte had the highest number of approved the use of wind power become evident, because according projects, representing 657 MW of installed capacity. Kaldellis and Zafirakis (2011, p. 1895) In 2010, the auctions for alternative sources of electricity resulted in hiring 2.05 GW of installed capacity in projects [...] cost of generating electricity in the near future, on land and at sea, maintain values between 50 /MWh and from wind farms. Overall, 70 wind farms were hired and Rio € 80 €/MWh, and between 75 €/MWh and 120 €/MWh, Grande do Norte was awarded 39 projects, from which 9 are respectively [...] energy reserves, which in total add up to 1.06 GW of power. In 2011, the Reserve Energy Auction hired 34 wind which makes it competitive when compared with other power projects, totaling 861.1 MW, 405.4 MW of which traditional sources of electricity generation. will be generated in the state of Rio Grande do Norte and This concern with the cost of deployment can be justified spread over 15 wind farms. Four projects in the State of by the increase in the price of raw materials such as steel, Ceara were included in Reserve Auction A-3. They were, copper, lead, aluminum and carbon fiber - sub-components in order of power installed: Catavento Paracuru I (30 MW), of the wind turbines (BLANCO, 2009). However, the São Cristóvão (29.9 MW), São Jorge (27.6 MW) and Santo expectations around the use of wind energy have changed Antonio de Padua (16.1 MW). Altogether, were applied due to investments in R&D in various companies around about $ 395 million in contracts from 103.6 MW in the State. the world. Like China and the USA, with innovations in Even though Bahia is a beginner in the area of wind power, open innovation approach is being applied to the various it runs to increase its importance in the sector. In May 2011, it components of the wind turbines. This promotes often opened its first wind turbine factory. Installed in the industrial reduction in the uncertainty of successful results and a Camaçari, with an initial investment of $ 50 million, the unit reduction in investment costs. Thus, the use of wind energy belongs to the Spanish company Gamesa. as a complementary source of power generation increases, Currently, Bahia is the second largest state in contracted since the costs of research and technology with these power in wind energy auctions. When the 52 projects planned innovations will decrease (LEICK, 2010; DINICA, 2010). to settle in the state are working, they will add about 1.4 GW In Brazil, the price of electricity sold from wind farms fell to the grid. The forecast is that by September 2012, 18 parks from R$ 305/MWh in 2005 to R$ 100.9/MWh in 2011.
Table 2. Associated power projects in the state of Ceara, Rio Grande do Norte and Bahia. State Source of energy Situation Capacity associated (MW) 54 projects of wind power With its planned construction 1.309,3 Ceara 11 projects font Wind construction 286,1 18 projects of wind power in operation 544,4 60 projects of wind power With its planned construction 1.886,2 Rio Grande do Norte 41 projects of wind power construction 1.054,6 13 projects of wind power in operation 307,5 33 Developments in wind power With its planned construction 837,3 Bahia 19 Developments in wind power construction 432 3 Developments in wind power in operation 95,2 Source: Adapted from Aneel (AGÊNCIA..., 2012).
108 Open innovation practices in the development of wind energy supply chain: an exploratory analysis of the literature González et al. 4. Technological innovation in wind power chain University of Pennsylvania, which developed work related to biomimicry, the study of biological structures and their According to the Ministry of Science and Technology functions, looking to learn from nature and apply to imitate (BRASIL..., 2011), innovation is the result of cooperative it in science. Later, it was discovered that the irregular processes involving several agents and capabilities as structures of whale flippers resulted in 32% less drag and companies and experts. Innovation can be understood as an 8% increase in support (WHALEPOWER, 2009). anything that appears different from the existing one, is a The Italian company Kitegen created a system of power moderate difference – called incremental innovation – or generation using an open innovation strategy using wind a completely new change, which involves risks in its kites flying at 1000 meters of altitude instead of propellers. development – called radical innovation. The movements of the kites are controlled by a computer The process of technological accumulation and learning that calculates the best angle and position to capture the technology skills are means of achieving innovation strongest winds. Energy is generated when the wind carries (BELL; PAVITT, 1993). Technological innovation may the kite from one place to another rotating structure and involve changes in equipment, human resources, or a transforming that energy into motive power. The company combination of these methods and may also be introduced reveals that his invention generates the same energy than in the factors of production or types of production output. 150 wind turbines (INOVAÇÃO..., 2012). Thus, innovation can occur both in the product and in the Ohya and Karasudani (2010) from the University of process the company. A technological product innovation Kyushu in Japan developed a new system of wind turbine is the “[...] implementation/commercialization of a product from studies of fluid dynamics consisting of a casing diffuser with improved performance characteristics [...]” that with a wide brim ring at the periphery of output and a wind provide new products to consumers, since the process of turbine on its interior. The wind turbine, that is wrapped technological innovation is the “[...] implantation/adoption with a diffuser brimmed, generates increased potency by a of production methods or new approach of marketing [...]” factor of approximately 2.5 compared with a wind turbine (ORGANIZAÇÃO..., 2004, p. 54). bare for a given diameter of the turbine and the wind speed. The advantages that come with technological innovation be The company Wave Motor Group along with researchers it in the process or product of the company, present on the cost Leung, Deng and Leung (2011) of the City University of advantages through increased productivity and greater market Hong Kong have developed a micro wind turbine designed share and gains, and competitive advantage by launching new to capture wind energy in urban and rural environments. The products in market demands and providing higher margins turbine system MicroWind is flexible in size and connected on production costs. In addition, Hall and Vredenburg to small generators that generate electricity on-site for easy (2003) consider that innovations must group the social and application. Owing to the plastic composition of the blades, environmental needs, as well as consider future generations, the system has low cost and can be driven by a wind speed as in order to align itself to sustainable development. low as 2 m/s. In order to extract more wind energy, several Upon talking about renewable energy sources, of these micro-wind turbines can be connected by their technological innovations represent a reduction in the cost external gears in an array to increase their contact area and of adoption of a particular technology and its implantation hence more potency. to enlarge the sources of power generation, as has been The examples cited in the development of the happening recently with wind energy. The fact is that this technology generated in this last decade, their practice was advantage is making renewable energy more competitive partnerships settled among different agents: research groups, than some conventional sources, such as fossil fuels. research promotion agencies, manufacturers, suppliers of As examples of innovations, we can cite the ones technological parts and communities where there is potential occurred in Japan, according to Inoue and Miyazaki (2008), for generating wind energy. Considering the definition of regarding to turbines, which speed was increased from open innovation approach we consider that it was important 20 rpm to 1800 rpm, to the control of angle of the blade to for the development of technical and economic feasibility maximize performance the generator, the rotation speed to of wind power supply chain. maximize the efficiency of the wind turbine by changing the rotational speed in about 40% of rated speed, and in 5. Conclusions another transmission using the generator, which leads to In times of growing consumption, the quest for turbines operating at low speed obtaining greater efficiency. differentiation in the market requires companies that Another practice of open innovation was the creation of a maintain constant updates at least on par with the market. completely new design for the blades of wind turbines, being Developing technology and/or new products in smaller time shaped humpback whale flippers, designed from the studies at a feasible cost makes company publish their ideas and of Dr. Frank Fish, a professor of biology at West Chester problems to the market in order to find innovative solutions
Vol. 10 nº 2 December 2012 Product: Management & Development 109 faster. Thus, the practice of open innovation reduces this Nowadays, the practice of open innovation has been period within technological development or offering happening for the development of Brazilian technology, new products while providing competitive advantage to because it is questioned that the equipment used in recent the company in relation to the expansion of its market wind farms have been designed taking into account climatic knowledge and technological solution. conditions very different to the Brazilian northeast region. In general, in the wind power supply chain, the open In response to this, and the initiative of a manufacturer innovation approach has reached many goals such as of wind turbines, FINEP is funding the first national reducing costs of equipment and components of the wind wind turbine, and have with participants: Research farms and more efficiency in the transformation of kinetic Laboratories, Universities, Government, Research Centers energy of wind into electrical energy. However, glimpses and Manufacturer of wind turbines. of a better use of open innovation approaches not only Therefore, research in this area should be developed the innovative components of a wind farm, but also the so that more wind farms are located, because its energy production process and organizational innovation along source is renewable, does not affect the environment, with the chain, with the guideline forming a supply chain a strong contribution to the energy mix of the country. In highly integrated partnerships and relationships between particular for the Brazilian northeast region, it represents companies, better visibility of the process, development an opportunity for sustainable development, since the areas of new custom components reality of markets, greater of greatest wind potential are located in municipalities with prediction for meeting production schedules and capacity low HDI – Human Development Index. For this finding, and continuous improvement in the value chain. it is recommended to conduct prospective studies of open The concentration of the practice of open innovation innovation approach involving local governments, the in the Asian continent, highlighting Japan and Hong Kong population of the municipalities and authorities regulating is highlighted, despite having little installed capacity of the environment in order to take practice what is known wind power, it is estimated that this concentration is due as the technological innovation chain that provides to large amount of investment and financing technological development for all its stakeholders. innovation in the region. In Europe, a research with open innovation approach occurred in Italy, despite the low 6. References significance of the installed capacity in the country. While countries like Denmark and Germany have activities focused AGÊNCIA NACIONAL DE ENERGIA ELÉTRICA – ANEEL. Disponível em:
110 Open innovation practices in the development of wind energy supply chain: an exploratory analysis of the literature González et al. CHESBROUGH, H. W. The era of Open Innovation. MIT KALDELLIS, J. K.; ZAFIRAKIS, D. The Wind energy (r) Sloan Management Review, v. 44, n. 3, p. 34-41, 2003. evolution: A short review of a long history. Renewable http://dx.doi.org/10.1007/978-88-470-1980-5 Energy, v. 36, n. 7, p. 1887-1901, 2011. http://dx.doi. COSTA, R. L.; CASOTTI, B. P.; AZEVEDO, R. L. S. Um org/10.1016/j.renene.2011.01.002 Panorama da Indústria de Bens de Capital Relacionados LEICK, D. Innovations in wind power technology. Renewable à Energia Eólica. BNDES Setorial, n. 29, p. 229-278, Energy Focus, v. 11, n. 2, p. 24-28,30,32-35, 2010. mar. 2009. LEUNG, D. Y. C.; DENG, Y.; LEUNG, M. K. H. Parametric DINICA, V. Wind Technology: A Framework for the Evolution study of a fan-bladed micro-wind turbine. Proceedings of of Innovations’ Impacts on the Diffusion Potential. the Institution of Mechanical Engineers, Part A: Journal Sustainability, v. 2, n. 3, p. 757-782, 2010. http://dx.doi. of Power and Energy, v. 225, n. 8, p. 1120-1131, 2011. http:// org/10.3390/su2030757 dx.doi.org/10.1177/0957650911413974 DUTRA, R. M. Viabilidade técnico-econômica da energia LINDEGAARD, S. Big vs. Small companies: Where eólica face ao novo marco regulatório do setor Elétrico are the differences on innovation? 15inno by Stefan brasileiro. 2001. Dissertação (Mestrado em Ciências em Planejamento Energético)-Universidade Federal do Rio de Lindegaard, 2011a. Disponível em:
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